Hello, and welcome to the KBC Group Earnings Release Q4 2025 conference call, hosted by Johan Thijs, CEO, Bartel Puelinckx, CFO, and Kurt De Baenst, Head of Investor Relations. Please note this conference is being recorded and for the duration of the call, your lines will be on listen-only. However, you'll have the opportunity to ask questions after the presentation. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. I will now hand over to Kurt De Baenst to begin today's conference. Thank you.
Thank you, operator. A very good morning to all of you from the headquarters of KBC in Brussels, and welcome to the KBC conference call. Today is Thursday, February 12, 2026, and we are hosting the conference call on the fourth quarter and full year results of KBC, as well as the 2026 and 2028 financial guidance. As usual, we have Johan Thijs, our Group CEO, with us, as well as his Group CFO, Bartel Puelinckx, and they will both elaborate on the results and add some additional insight on the new short-term and long-term financial guidance. As such, it's my pleasure to give the floor to our CEO, Johan Thijs, who will quickly run you through the presentation.
Thank you very much, Kurt, and also from my side, a warm welcome to the announcement of the fourth quarter results of 2025, which was also obviously is then the announcement of the full year results of the very same year. Let me start with the highlights. As a matter of fact, and I always use in this perspective the same thing, Glenn, you know what I'm going to say. The machine has been firing on all its cylinders. Yes, indeed, all the different aspects of our bank insurance franchise have been performing excellently.
You know, first of all, we have continued to operate at a diversified split of 50% net interest income and 50% non-net, net interest income, despite the fact that our net interest income grew significantly, which clearly means that we are able to perform also on the asset management side and the insurance side, life, non-life, at the same growth pace as the increasing net interest income. Coming back to that net interest income, it was significantly up compared to previous quarter and obviously significantly up compared to previous years, which was triggered by, in essence, two things. First of all, a further continuation of the strong performance of what we call the transformation results, so our replicating portfolio, which was further boosted by the further continuation shift of term deposits into current accounts, saving accounts.
Next to that, we also saw a strong performance. Our loan and our customer deposits both are growing significantly in all the countries and therefore contributed to the net interest income. We saw as well a record net sales over the full year, which was supported by with, again, a positive net sale on the fee and commission business, so asset management business in the fourth quarter. The insurance business performed excellently also with growth numbers, double digit, both on non-life and on the life side, which was, by the way, improving even the record results of 2024. In that perspective, we also see that the underlying... Sorry.
First of all, the total income in total grew 9%, on the year, while our cost maintains at the guided level of 2.5%, in that perspective, excluding obviously the bank taxes and the FX effect, which is giving us a draw of more than 6%, as a matter of fact, 6.4%. Quality-wise, impairments under control, 13 basis points, significantly better than the guidance and the combined ratio, also 87%, also significantly better than the guidance. As a matter of fact, all the elements which we provided for as a guidance in last year, were achieved, or let me say differently, overachieved. This has two consequences.
First of all, if you wrap it up in your capital ratio, then our common equity Tier 1 ratio now stands at 14.9%, and our liquidity ratios stand at very solid positions, both in the short term and in the midterm. Which allows us to say that the dividends which we are going to propose to the annual general meeting will be 5.1 EUR per share, and if you include there the AT1 coupon, that means a payout ratio of 60%. Given the exceptional character of 2025, not only in terms of the results, but also in terms of customer satisfaction, in terms of employee satisfaction, and also on the digital front, where we have once again been nominated, having the best banking app in the world.
We also decided to contribute a profit allocation to the tune of EUR 25 million into a what we call Team Blue Bonus for our staff. We also provide guidance for the period to come, but I will go into that in more detail later on, and we will then immediately switch into the detail of quarter four first. On the next page, you can clearly see the performance of our digital initiatives. This is underpinned by what you already know, Kate. It's performing better and better.
It has been retrained, as I said, on previous occasions, and it now is a fully fledged large language model included, which means also that the autonomy of Kate under that new formula, so Kate 2.0, is now having an increase of its autonomy, which means the ability to solve questions of our customers without any human being interfering. And solving the question means providing the requested product or providing the requested answer to the customer indeed. Well, that has increased with roughly 20% compared to the previous version, and now brings the autonomy to 82%.
As a matter of fact, we will be launching this in the Central European countries in the quarters to come, and that will mean that efficiency gains in that perspective will be to the same tune, because the automation in Central Europe is now hovering around 70%, which indeed is the previous number of Belgium. In terms of the job done by Kate or the equivalent FTEs, we talk now more than 400 FTEs. But what is also very much more important, that is, Kate is able to deliver 400,000 sales independently from the traditional network. Also in that perspective, we will continue to invest in the near future on the same developments on the innovation front. And just to highlight, we launched in quarter four, an ecosphere around mobility.
That ecosphere was launched in Belgium, was triggered in the first month by 73,000 users, which were generating indeed already a lot of data, which is enabling us to sell more products to these customers. In terms of one-offs, it was a very normal quarter. You can see that on Page 5. Roughly 87 after tax, 9 before tax of exceptional income, it's not worth to talk about it. There is, of course, a bigger impact in 2024, end of year. So be careful. The DTA of Ireland was at that stage included. Now, more importantly, is what about the evolution of the net interest income?
Well, we do report today EUR 1.608 billion of net interest income, which is a significant rise of the net interest income compared to previous quarter, 5% and even 12% compared to previous year. What is the driver? As we said on previous occasions, it is the result of the commercial transformation result, which continues to increase significantly. What is underpinned by two things. First of all, the reinvestment yields, which continue to rise, and we confirm here today that through the cycle of the guidance, 2026, 2027, 2028, this will be again the case.
Second element, which is crucial in this perspective, is the continued increase of our deposits, first of all, and secondly, also the shift from term deposits back into current account, savings account, which allows stability on our transformation result. So in this perspective, indeed, commercial transformation result has boosted the net interest income and will continue to do so going forward. Second main contributor is the net interest income generated on lending side. Well, here again, we had a good quarter in 2025, quarter four, with a growth of 1.1%, which brings the total growth of 2024 on the lending, sorry, 2025, obviously, on the lending side to 7.4%, which is much better than we originally anticipated and which we guided for, and so therefore it contributes to the lending growth.
What remains under pressure, obviously, are the commercial margins. It is not true that in every type of product, in every country, the margin will go down. This is not the case. For instance, the margin on mortgages in Belgium went up with 8 or 9 basis points. But in general, I would say there is commercial pressure, but this is offset by the volume increase and therefore also the increase of market share, which we see in most of our countries.
In summary, the net interest margin went up to 211 basis points, which is significantly higher than previous quarter, and this is indeed triggered by three things: the replication portfolio, which continues to perform excellently, as explained, the shifts between term deposits and current account, savings accounts, and then obviously also the fact that in Belgium, we brought down the loyalty premium on the savings account to 10 basis points. Now, in terms of all the other elements of net interest income, while they're more or less in line, so I would not dwell upon this too much. But let's say in essence, they are in line with what we have seen in previous quarters. If you take a talk about inflation-linked bonds, if you talk about the short-term cash management, so on and so forth.
So not worth to spend too much time, but we will be happy to answer all of your questions in that perspective. Far more important is the next slide, where you see the evolution of our customer money, and the core customer money, and the message is very straightforward. In the fourth quarter, again, a positive evolution of EUR 4.5 billion, which is triggered by two things. First of all, the shift of term deposits into current accounts and savings accounts. As a matter of fact, there is a positive delta of roughly EUR 4 billion, and then on top of that, we do see monies flowing in further, continue to flow in into the, mutual fund business. Again, a positive growth of EUR 0.7 billion.
So in total, for the full year, this brings us an inflow of a striking EUR 13.5 billion, which is in essence split up as a shift of, let me round the number, roughly, EUR 9 billion of term deposits and savings certificates into current account and saving accounts, totaling that amount as an inflow of roughly EUR 16 billion, further underpinning the replicating portfolio. And then last but not least, a record year in inflow into our investment products, mutual fund business of EUR 6 billion, but that is worth in itself, a further explanation in a second. So to wrap it up, we do see a continuous shift from lower yielding term deposits into higher yielding current account, savings accounts, but also mutual funds.
This is a trend which we continue to see in 2026 and also expect to happen going forward, given the evolution of the policy rates of the central banks. Let me then go immediately into fee and commission. Well, fee and commission, EUR 725 million, which is up roughly 2% on the year, on the quarter, and 4% on the year. And this is again, driven by the performance, mainly on the asset management services side. So first of all, we did see a good performance on the management fees for obvious reasons. And secondly, we do see also a good performance on the sales side, which is further contributing to the growth of those asset management services fees.
In terms of the banking services, well, in essence, we do see there also a good performance. There is one caveat, and the caveat is when you do excellently on the sale of certain banking products, you have to pay commissions, and those commissions are deducted here from the fee and commission, and that is EUR 11 million. Otherwise, banking services will be on the rise as well. So in that perspective, the fourth quarter is a continuation of what we have seen in the three previous quarters and is then bringing the total of assets under management to a record high, EUR 300 billion. Direct client money, you can see it on the graph, is also on the rise, and this is mainly triggered by end market performance, but also on net inflows, as I just explained.
Just for information purposes, if you look at the gross sales of 2025, we have a striking EUR 16.5 billion of gross sales, which is translated in net sales of EUR 6 billion, and this is indeed a record high. Also, small detail, we do see strong performance on our trading platforms, and in those trading platforms, we have two major contributors, the Belgian Bolero platform, which saw an increase of 25% of customers over the year and a 45% increase of transactions. And more or less the same can be said about the Czech platform, which is used in Central Europe. So not only in Czech Republic, where we did see the same kind of performance or a likewise performance. Anyway, what about the other part of the diversification, insurance?
Well, if you look on the year-on-year results, 11% up. If you look year-to-date, it's 9% up, which is indeed a striking number. And this is translated not only in a strong growth, but also in good quality, because the combined ratio now stands at 86.7%, and that is better than guided, but also better than last year. So continuation of good growth, 9%, and good quality with the delta compared to the 100% combined ratio of 13 percentage points. Life insurance sales, well, we had until the third quarter, already a record performance, and fourth quarter has topped that up with a whopping 26% increase, which is triggered by both unit linked as interest guaranteed products. Mainly interest guaranteed products due to commercial campaigns run both in Belgium and Central Europe.
So this performance of growth in the life insurance side is also true for Central Europe. And let me emphasize something I forgot on the fee and commission. This, the growth of the fee and commission business on the asset management side was also driven by Central Europe, in essence. So in this perspective, we do see, again, a very strong growth, which means that the guaranteed interest products and the unit link both roughly are 45% of the total production, which means that is very well balanced.
In terms of the more volatile results, financial instruments, fair value, we do see a fundamental increase of the contribution, which is mainly linked to the fact that the ALM derivatives have been performing better due to, in essence, the difference between the previous quarter and this quarter is mainly driven by positive contribution of the ineffectiveness of hedge accounting and better performance due to better interest rate swaps. Coming to the net other income, while the run rate is roughly EUR 45 million, so with EUR 39 million, we're slightly below, but this is a detail, and in essence, I would say it's perfectly in line with what this should be. Let me then go to an important line that is the operating expenses line.
Well, you know, we guided in the beginning of the year a growth of 2.5%, year-on-year to date, and we delivered on that precisely 2.5%, cost increase, full year 2025, compared to full year 2024, excluding obviously, bank taxes and the FX impact. So in this perspective, it's perfectly in line in the guidance, and that if, that entails also, the efficiency, because intrinsically, if you look at the contributors, we have the seasonal effects in the fourth quarter of IT contributors, marketing expenses, and so on, support. But if you look at the underlying result, well, in essence, it's very simple. We brought down the total number of FTEs, KBC Group-wide, so we have less people, but we have 9% more revenues generated in 2025.
And it is that efficiency which we are going to continue in the years to come, 2026, 2027 and 2028. How is this translated? Well, this is translated in a further improvement of the cost-income ratio. If you do more with less people, then your cost-income ratio goes to 41% when you exclude the bank taxes. And bank taxes speaking, we now have, six hundred and sixty-six million euro. It's a very interesting number, and is therefore also called bank taxes. No further comments. On the next page, you see the detail, and, let me go then immediately into impairments. Well, impairments are well under control. We had actually a good quarter in quarter four, seventy-six million euro were, related to the loan book, which was triggered by one or two bigger files.
But this is perfectly in line with the guidance which we gave. And on the buffer, which we hold for geographical and emergent risks, we only had a release of EUR 3 million, which brings the buffer to EUR 100 million, which can be used for circumstances if they would derail it in the future. We also had a EUR 48 million impairment on goodwill, which is mainly triggered by a impairment on software. This is software mainly in the Central Europe entities, where we have, as you know, installed new platforms, and we impaired other parts of solutions which were built in that perspective.
In terms of the remaining amounts, EUR 9 million is linked to a government initiative in Slovakia, EUR 9 million of nine modification losses and EUR 7 million on goodwill impairment, which sums it up to 48. What about credit cost ratio and impaired loans ratio? Well, we continue to see a very good credit cost ratio, 13 basis points, regardless of the buffer, and the 13 basis points compared to the guidance, which we gave below 25-30 basis points, which is that box is ticked. Also, when you compare it in the longer term, credit cost ratio of 25-30 basis points, well, then, this is significantly better. The ratio is good. Why? Because also the underlying portfolio on impaired loans is further improving. It now stands at 1.8%.
If you would use the EBA definition because of the KBC definition, a bit harsher, then the number stands at 137 basis points, which is significantly better than the European average. Also, if you would look into the evolution of the PD classes, which you can find in the quarterly report as well, then you see there that in quarter four, we had a further improvement of the PD evolution, in our loan book, triggering indeed, this credit cost ratio and saying that the quality of the book is good. Going to, the capital ratios, which, you know, are built up by two sides.
In the numerator part, we add the contribution of the quarter four, and we obviously also add the dividend payments of KBC Insurance, which is, as you know, lagging one quarter behind in the insurance side. So the results you see here is the dividend of the previous quarter, which is booked, and totaling EUR 19.2 billion CET1 capital. What about the denominator? Well, that denominator is influenced by two things. First of all... Actually, three things. First of all, growth. Given the fact that we're strongly growing our asset side, so our loan book, that has an impact on the risk-weighted assets to the tune of EUR 1.7 billion.
Next to that, we have the traditional booking of the operational risk-weighted assets, totaling EUR 1.2 billion, and some changes on the market risk weighted assets, 0.8. So in total, let's say round to number, roughly EUR 4 billion, but this was offset by the inclusion of the impact of the SRT, which we run in the fourth quarter, and that SRT brings down the risk-weighted asset increase to roughly EUR 1.7 billion. In that perspective, the capital ratio now stands at a solid 14.9%. What is not included in this capital ratio are in essence, two things.
First of all, we have closed the acquisitions of 365.bank, and two days ago the acquisition of Business Lease, Czech Republic and Slovakia, and the sum of the two will have an impact of 50 basis points. And then what is also to be known is that we will continue to further optimize our capital position, risk-weighted assets position in the course of 2026, with SRTs, and therefore try to mitigate the impact of the volume increase, which we foresee as we speak in 2026, 2027 and 2028. Going to the ratios then. Well, we end up with an OCR ratio of 10.87%, which is 2 basis points higher than before.
This has to do by legal changes on the systemic buffer, and so on, so forth. It's only 2 basis points, so let's not dwell to prolong upon this. And then the MDA stands at 10.91. This is triggered by a four points percent. No, not four points percent, 4 basis points, difference on the Tier 2, and that is almost fully, but not entirely compensated by the 81 surpluses. Leverage ratio stands at 5.6%, which is a further increase, which is also true for the liquidity ratios already mentioned them. And also the insurance stands at a very solid 227% Solvency II ratio, which was positively triggered by the evolution of the spreads on the bonds and also obviously by the contribution of the results of the insurance company.
Which brings us to the future. What about the future? Well, the guidance this time is a bit more difficult because we are comparing 2025 as a base year with 2026, 2027, 2028, where KBC Group changes from a composition. 2025 does not contain 365.bank nor Business Lease acquisitions. So therefore, let's be careful, and therefore, we prefer to give also guidance on the underlying performance of KBC Group in 2026, 2027 and 2028. On the first slide, this is on Page 19, you can see what actually we guided last year for 2026 and 2027. If you look at the performance, the underlying total income growth, which we forecasted a year ago, is 5.3%.
If you look at the guidance, longer-term guidance on last year for 2026 and 2027 on the cost side, then we guided an increase of 3.3%. Well, if I just take now a look at 2026, 2027, and 2028, purely organically, so forget about the acquisitions, then we guide that our income growth for 2026 will be stronger than the 5.3%, so 6.8%. And the efficiency, the cost evolution will be roughly the same as what we guided a year ago, so 3.4%. Let me translate that differently. We use the same efficiency, but we add hundreds of millions EUR to our bottom line P&L. So in the operating profit, there will be a strong positive contribution remaining the efficiency of what we had.
Or let me use it differently, with the same people doing even more revenues. Intrinsically, what we do then add for the long-term guidance is the acquisition of 365 and Business Lease. 365, added in 2026 means that we are adding a company which still is not working according to the KBC standards. We do foresee max 24 months to make 365 Business Lease, working according to the efficiency and productivity standards of KBC. That means that we will have the full benefit on the revenue side and on the, cost side, fully into 2028, not 2026, 2027, because you just absorb them, as of the first of January of this year. As a matter of fact, this also then gives for 2028, the same underlying results.
We will continue to see the underlying growth of our cost 3.4%, with that difference, that our top line will grow even faster than what was done in 2026 and 2027, so 7.7%. So adding them at the end of 2028, the efficiency, the benefits of 365 and Business Lease, will add another EUR 100 million on your bottom line. So in summary, in essence, underlying, you will have a draw of 3.4%, and this is true for the entire cycle. The difference is that we will continue to grow our total income further and stronger than what we did last year, and therefore it adds to your operational profit, hundreds of millions of EUR. How you translate that then in efficiency?
Well, we do see the cost income ratio of 26 guided at roughly 40%, and given what I just said, we do more income with less people. We will guide the cost income for the longer term below 38%. All the rest on the guidance is more or less in line. We increase the guidance on our insurance business from 7% to 7.5%. Combined Ratio goes to below 91%, and then credit cost ratio is well below the 25-30 basis points. Let me emphasize again, this is what we call the floor ceiling approach. So everything which is related to income is a floor, so it's at least, and everything which related to costs or claims or impairments is considered to be a ceiling, so max.
In that perspective, one more detail, we do expect our net interest income for this year to be at least EUR 6.725 billion, which is compared to previous year roughly 11% growth as a floor, so it is at least. Let me go then in the wrap-up. The wrap-up is in that perspective a repeat. So let me actually emphasize only one slide. That is a slide of full year 2025. If you look at 25 as a summary of four quarters, then this is indeed EUR 358 million of profit, which is significantly better as last year. If you exclude the one-offs, one-off effect of the DTA in Ireland out of the year 2024, then the profit rose with 18%.
Given the fact that, you know, the guidance which we just gave of 2026, 2027 and 2028, it's just a promulgation and a continuation of the effects of 2025. The outlook on the operating profit is more or less in line with what I just said on 2025, 2024. Given the exceptional character of this year, where we not only had record results, but also record performance on the customer satisfaction, employee satisfaction, and the best banking app in the world, we also decided or not decided, we proposed to our board yesterday evening to grant an exceptional bonus of EUR 25 million for the entire group to our staff. This bonus is yesterday positively advised, and now will be proposed to the AGM in May.
The reason why it goes to the AGM, it is an allocation of profit.
... and therefore, under Belgian GAAP, it will be indeed, when it is approved by the AGM, it will be booked under the profit allocation. In the IFRS, the rules are a little bit different. That profit allocation is considered to be a cost, and that will be then, if positively decided by the AGM, will be contributed to the costs. That cost, given the fact that decision needs to be taken, is not in the guidance. So this sums it up. I am not going to dwell upon all the other slides. I give you time for your questions, so I give back the floor to Kurt.
Thank you, everyone. The floor is now open for questions. Please restrict the number of questions to two, to allow for a maximum number of people to raise questions. Thank you.
Thank you, sir. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two, and please ensure your lines are unmuted locally, as you'll be prompted when to ask your question. Again, we kindly ask you to limit yourselves to two questions only. The first question today comes from a line of Tarik El Mejjad from Bank of America. Please go ahead.
Hi, good morning, everyone. Two questions. I mean, first, I would just come back on your point about, you know, you always arguments about NII is a floor and or revenue is a floor, and costs guidance is a cap, and I understand where is the upside could come from, from both. First, on NII, I would like to understand what volume assumptions you use for loans and deposits. I mean, for loans, you gave the 5% year-on-year in 2026, but on... Which sounds to me quite lowball given your delivery and the pickup in growth in CE and in Eurozone. But what's your view on this, and what's the outlook for beyond 2026?
Is it fair still to apply the usual 2.12% NII conservatism buffer you guys always had? Worked quite well in the past. So just wondering if you still have this cautiousness there. And then on costs, I understand the scope effect change, but on the AI and tech and basically, you know, growing Kate further, how much actually are allocated on investments on this? I mean, for AI and tech, for banking, it turned from banks being winners to losers in last few weeks. What do you think of that, and do you see it really as a pain first, then benefit, or you think you can reap the benefit first? Thank you.
Well, good morning to you all. I will respond to the first question of Tarik, related to the development of the loan volumes and the deposit volumes going forward. So indeed, I mean, we recorded an exceptional 7.4% organic growth in the loan portfolio in 2025. But this is indeed exceptional. We now guide in 2026 for approximately 5% growth. The reason why we had a very strong growth in 2025, which is rather exceptional, was, of course, triggered by the first half of the year, particularly in advance, also of the uncertainty related to the tariffs, where we saw quite some increase also in anticipation of those tariffs of production in Europe as one element of that.
And secondly, we also indicated that basically the strong growth in the first half was driven by a number of large transactions, mainly M&A transactions of some of our core customers, which drove the increase to indeed, for the full year, 7.4%. We do not expect that to be repeated in the 2026. That is the reason why we guide 5%, but obviously 5% is based and driven by the fact that we typically look at the composition of the GDP growth on the one hand, and the inflation. That's a rule of thumb that we always use, particularly in Central Europe, GDP growth plus inflation, which indeed is bringing you to roughly 5%.
And by the way, when you look back over the past five years, we always have been able to grow our loan portfolio by 5% organic growth. So that is where the 5% comes from. And then, as far as the deposit side is concerned, so we never guide on the growth of deposits, but as you have seen, we have 2.8% organic growth for the full year and 4% growth for the full year non-organic. This gives you an indication of potential future growth. Obviously, also here, the wealth conversion and the GDP growth in Central Europe is going to contribute to that, and so we have a positive view on the further growth from that perspective. So that explains where we come from.
We do not guide on the loan and deposit growth for the 2027 and 2028 for obvious reasons. Tariq, good morning also from my side. I will answer your second question. Indeed, there is at this, let's say, last quarter, there is a big shift in terms of also media attention and statements made on artificial intelligence and impact on business development, but also on efficiency, and not only in the financial industry, but in general. But specifically for the financial industry, I think our sector is, in that perspective, really, really prone to using and embracing artificial intelligence if productivity gains needs to be achieved. So giving this general statement, you can imagine that we are continuously and emphasizing this. We have been doing this for the last 11 years already.
KBC started with its artificial intelligence applications in, in our organizational structures and in operations.
... in 2014, 2015. So we will continue to do so. We have an intention to further optimize the way how we are working, and that is done in two ways. First of all, we continue to develop our backbone because in KBC, the philosophy of using artificial intelligence, and that is, I think, a little bit different than what you sometimes read in the press. I have the impression that in the press sometimes people are believing that when they mention the word artificial intelligence, that only the fact that it is mentioned already increased productivity gains. I do not think that is a given. I think you have artificial intelligence productivity gains only when you tailor your AI solutions to the specific needs of your company. That's the first thing, and second thing, we will continue to do so.
You can read it in our presentation as part of our Q4 announcement, but it's already be in that, in that pack for, let's say, 10 years. We continue to develop our front end and our back end connected via AI solutions. This is translated via Kate, amongst others, but we will continue to develop those going forward. Straighter processing, which means using AI tools to tailor solutions to customer needs without any human being interfering in KBC, and the commercial processes stands now at roughly 65%, and the ambition is to bring it higher. But and that's something which we launched in, two thousand and twenty-five, beginning of the year, and this is now coming to maturity. We also are doing this exactly same thing that is connecting your front end and your back end.
The front, in this case, the internal people for the non-commercial processes, and that needs to be... That is also using AI for good understanding, and that needs to deliver its results in the course of 2026, 2027, and 2028. So in that perspective, yes, we will continue to invest in artificial intelligence, so using innovation, but we will continue, and that is, I think, far more important to use artificial intelligence to automate the processes in what we call a dark factory mode, so without any human beings interfering.
The total summary of all investment is also part of the pack, including the transformation of the back offices, which is the trigger, including the front office applications, including artificial intelligence, is cash-wise, EUR 2 billion for the next three years and is roughly EUR 1.5 billion in terms of OpEx, also over three years. Thank you.
The next question comes from the line of Namita Samtani from Barclays. Please go ahead.
Morning, and thank you for taking my questions. My first question, I see the footnote on the net interest income guidance says you include conservative pass-through assumptions. Can I clarify, do you mean pass-through of policy rates or pass-through of your replicating portfolio yield? Just wondering, because both your Benelux peers are guiding to around 100% pass-through of the uptick in their replicating portfolio to savers. So are you similarly conservative there? And my second question, could you please give us an outlook for banks and insurance taxes, please? Because when I look at a country level, Belgium's gonna be up around EUR 35 billion year-on-year, Hungary is gonna be up EUR 60 million, and you're guiding to 5% deposit growth or something similar. So, I find consensus being up in the EUR 25 million year-on-year quite confusing.
So, is my math wrong, or can you give some color here, please? Thank you.
Good morning, Namita. The conservatism that we guide for is basically the external rate on the saving accounts, which is, of course, going to be depending on the evolution of the policy rates going forward. Okay, and then I will take your second question. On the bank taxes, indeed, there is not a guidance provided yet for the simple reason that there is uncertainty on one big element, that is what the Belgian government is going to do. So it is unclear, definitely in the detail, how and what the Belgian decision in this matter is going to be, and therefore, we cannot give you now a right insight in what the evolution of the bank taxes is going to be. I am not...
So I know you made a reference to certain articles in the newspapers. I'm not convinced this is the real situation yet in Belgium, so therefore, I recommend to wait until the end of quarter one, when we are going to announce anyway, the guidance or the expectations on bank taxes for the full year, because then we will have better insight how it's going to work. The other element on bank taxes is, of course, Hungary, where the Hungarian government has already positioned itself. As you know, part of that positioning is actually passed through to customers. The other part is impacting our P&L, and that has already been disclosed earlier.
All the other countries, no bank tax changes are foreseen, and therefore, we will give you full guidance on the bank taxes when we have more insight, more clarity on the Belgian position. End of quarter one.
Thanks. Sorry, can I just follow up on this, on the savings account? Can you quantify the pass-through, or are you assuming an increase in deposit costs if base rates are stable? Thanks.
Well, no. But basically, what we're doing, I mean, you always need to take into account, of course, what the commercial impact is gonna be, and also, of course, of course, when the policy rates would be increasing, then obviously it's likely that we would be required to increase our external rates on the saving accounts as well.
... And that's the reason why we put some guide, some conservatism on the external rates on the saving accounts.
Thanks very much.
The next question comes from a line of Benoît Pétrarque from Kepler Cheuvreux. Please go ahead.
Yes, good morning. So my first question will be on the assumptions on NI for 2026 and 2028. So on the volume growth, I think you, you've clarified that. Could you maybe clarify what your assumptions are on asset margins going forward? Also in terms of shift from term deposits to yeah, other type of deposits, and also clarify on the pass-through rate assumption. Sorry to come back on that. You know, what time of marginal pass-through rate assumption do you expect in your guidance? So that's the first question. Number 2 is on OpEx. Thanks for the slide 19 and the kind of organic OpEx growth of 3%, 3.4%. It sounds still a bit high. I'm looking at the Belgium inflation, and we know we have indexation there.
This is coming down quite sharply, so, yeah, I'm trying to understand why, why you, you expect 3.4%, and did you include any, maybe one-off investments? We talked about AI and, are there any specific, investments in, in that number? Thank you.
Bonjour, Benoit. So as far as your first question is concerned, first of all, the margins on the asset side. Basically, I mean, I already indicated, and I should have also highlighted that, on the mortgage side, let me start by that one. We still expect some quite some nice growth, also in Belgium, actually, also this year, started well off quite nicely with continuous growth also on the mortgage side, but particularly in Central Europe, and this in all countries.
In terms of margins on the mortgages in Belgium, as Johan has been highlighting, we saw we further reduced the gap with between the front the margin on the front book and the margin on the on the back book in the fourth quarter by roughly 8 basis points. However, what we see is in the beginning of this year, that competition has in somewhat increased, and as a result of that, margins are somewhat more under pressure in Belgium. This is less the case in certain countries in Central Europe, where, particularly in Hungary, due to the fact that we have the Home Start program and the fact that now 80% of the business is being subsidized.
This also leads to significantly higher margins, and supporting, of course, further growth also of the mortgage business. In Bulgaria, also there, we see a very strong and continuous growth. You know that, in anticipation of the euro adoption, the mortgage business increased quite significantly, but we see that pattern continuing also after the post-euro adoption at margins that are now at least compared to the Euribor in a positive range. However, also, you know, that there is a very particular funding approach and replication approach in Bulgaria, where the margins are, or the external rates are directly linked also to the external rates on the deposit side.
As far as the Czech Republic is concerned, also there, we continue to see quite nice growth of the mortgage portfolio, but also there, margins somewhat more under pressure, being still in line with the margins on the back book. Slovakia, also their continuous growth margins similar to the Czech Republic, approaching more also the margin on the back book. Then on the mortgage side, on the corporate and SME side, we also expect continuous growth in both segments, where in most of the countries, the margins are quite strong and continue to be grow-- We expect them to continue to be quite strong going forward. Also in Belgium, although there, of course, competition might increase in the course of the year. So that on the asset margins.
As far as the shift is concerned, towards term deposits, as you have seen, and indeed, as Johan has been highlighting, there has been a huge shift of term deposits to, say, CASA, particularly in Belgium, following, of course, the maturity of the term deposits that were issued one year ago following the repayment of the state note or state bond, I should say. Basically, 50% went actually back to CASA. So this is obviously a, you know, one-off experience, but we do expect, going forward, that that shift will continue as well, depending, of course, on the development of the policy rates.
That's because, of course, if the policy rates would increase, it might be that some would return from CASA to term deposits, as well as, of course, the continuous growth of our asset management business, where we will continue also to focus on increasing, particularly the net sales. So that as far as the shift is concerned, of term deposits towards CASA, and as far as the pass-through are concerned, basically the pass-through as such, we do not guide specifically.
Good morning, Benoit. I will take your second question. Yes, indeed, as you pointed already out, the cost increase organically for 2026 is mainly driven by inflation, but I would nuance the word inflation because I would more specifically refer to wage inflation. In general, we do expect a wage inflation of roughly 3.7% for the group, which means not only Belgium, where it is indeed indexed, as you rightly pointed out, but obviously you also have promotions and some support, and the sum of all parts means that the wage inflation is 3.7%.
Which immediately indicates that if the guidance which we gave, 3.4% cost rise for 2026 organically, it means that efficiency gains are bringing down the number of wage inflation to the total cost increase. Let me translate it more boldly. We do more work, more output with less people because the inflation of the salaries is otherwise eating up your cost performance. So in essence, this is not only true for 2026, but this is indeed the same for 2027, for 2028, where the CAGR of the cost side, of the wage inflation side, sorry, is also roughly the same amount, 3.7%-3.8%. So in that perspective, yes, indeed, we do the investment. That was the answer to Namita's question.
Sorry, on Tariq's question. That is indeed the efficiency gains are triggered by the automation via artificial intelligence solutions, and therefore, we are able to bring down wage inflation to a lower cost level. Your question about investments and more specifically, one-off investments. Well, I would not call it one-off investments, but in the numbers of 2026, 2027, and 2028, we do have, actually for the first time, bigger parts coming in on the cost side, which are related to investments. Let me highlight one thing, the investments which we are doing in Czech Republic on both the banking and the insurance side, where we're building new platforms, are yet again front-loaded, so you see that more into the cost and the benefits will come later on.
So in the course of the next coming years, while that is increasing, for instance, on the Czechoslovakia banking side, the cost, 26 versus 20, 25 with another EUR 12 million. But as I said, you don't see it in the CAGRs. Why? Because we are making more gains on the efficiency side, on the, let's call it automation, on AI side, and therefore, all those investments are returning into the P&L, which allows us, as I said, to make more revenues, substantially more revenues. I'm talking about hundreds of millions EUR with less people and therefore with, a strong positive contribution.
Thank you very much.
The next question comes from a line of Shrey Srivastava from Citi. Please go ahead.
Hi, and thank you for taking my questions. Two for me, please. The first is: you guide all the way till 2028 to be notably below your through the cycle cost of risk, 25-30 basis points. At what point do you start to question the through the cycle range, rather than just commit to being below it year after year? And my second one is another one on artificial intelligence and Kate. You mentioned when you introduced your large language model, you drove an increase in autonomy of 15%. What are the latest figures on this? Because you, you've obviously had three months more now to test it. It was very new at the time.
Could you give an idea of sort of latest developments here, if there's been a higher increase in autonomy or if you have a greater level of confidence? Thanks.
Thank you for your question, Shrey. Let me answer. Well, I'll probably take both. Anyway, so your question about the longer term or the cycle on the credit cost ratio. Well, as a matter of fact, we already reviewed it a year ago when we took out a couple of one-off effects, among others, the longer term cycle, which is somewhere in the pack. I don't know the number, the page number by heart, but it is indeed roughly 30 basis points. We reviewed it. Why? Because in those numbers, the longer-term 25 years number was including obviously the financial crisis and was including Ireland, which is no longer part of a group. So we reviewed the numbers.
What you see here, the 25-30 basis points, is the group as it is over the last 20 years. Do we need to review it? Well, I mean, we could give you more details by saying the last 10 years or the last 5 years or whatever, but this is what the group is in the longer term. So the through-the-cycle number is 25-30 basis points, reviewed in the composition as it is, composition of the group as it is today. Then going to the artificial intelligence and the increase of autonomy. As I said, during the announcement of the results, there is indeed an increase of the efficiency of the tool which we use and which is used in the front end and in the back end.
You referred to earlier, said 15% increase of autonomy. Well, it is actually today in reality, so in production since, what is it? Four months, is actually 20%. So originally, Kate, when we changed it, had an autonomy of 70% in Belgium. Now we do have an autonomy of 82%, which is roughly 20% +. The Central European entities are today, as you can see it on the slides, 69% in Czech Republic, but in Hungary and in Bulgaria and so on, support is 71%, 72%. So in summary, is there roughly 70%. We will use the new tool-...
the Kate 2.0 also in the next coming quarters in the Central European countries, and therefore you can expect the rise of that autonomy indeed, in line with what we have seen in Belgium. Two other small remarks. First one, it's not only the autonomy which is up significantly, but we do see that customers are using more and more Kate because of the new tool. Why? It's far more intuitive, it they can answer contextual questions and some support, and therefore, customer satisfaction was significantly up as well, translated in more usage. More users means more efficiency, means more work done by Kate. As you have already seen in this quarter, that is, number of FTEs is on the rise. That's the first thing. Second thing is, we also use this Kate in the back offices.
Let me give you a silly example. At first glance, it's silly. You know, every bank has a database which contains all the information which our employees needs to use regulation, product features, da da da da. What they do in the past, they are going into the database, when they have a question, they look for the information, they spend X minutes, for instance, 10, 15 minutes before they find the answer to that question. Well, this has been translated into Kate 1.0 already, but is now translated in Kate 2.0, which has a huge boost on the efficiency. Whereas previously an employee was not always able to find the answer, it took 10, 15 minutes to find the answer.
Today, with Kate 2.0, all answers are found, and the throughput time is one second, and therefore, we just celebrated the 100,000th question in Belgium under the, under the tool, Kate, for staff, and that means that efficiency gain is translated into the numbers as well. So it sounds silly, but the impact is quite significant. For good understanding, this tool is rolled out group wide.
That makes sense. Thank you very much. Just if I may quickly follow up on the first one. You mentioned 25-30 is the through the cycle for the entire group, but obviously 2028's a way away, and you must have some degree of confidence to guide for something which is two or three years away. So just what, what gives you confidence in 2028 being well below the 25-30 through the cycle?
Now, so for... Indeed, yes, we—I mean, the floor ceiling approach, you know, the, given the fact this is a ceiling, we are very confident that it will be low. As a matter of fact, when I look into the portfolio, the guidance which we gave is based on the underpinning elements, obviously. One of the most important underpinning elements I highlighted briefly during the call, that is, what about PD migrations? And the PD migrations in quarter two, three, and four of 2025, and it sounds perhaps counterintuitive, given the, I mean, the world and the shape of the world we are in, the PD migrations have been improving. So we do see in our entire loan book, the PD migrations shifting to the better side. So a number of defaults, that is improving.
Well, of course, can happen is that there is a bigger file here and there, but if you take that into account, and you take into account the observations which we have for 2026, 2027, 2028, given, and that is an assumption, the same economic environment which we have, well, then there's no reason to assume that the 13 basis points, which we have seen for 2025, is going to be fundamentally different than in 2026, 2027, 2028, which means significantly below the 25-30 basis points. One caveat, and you probably know what I'm now going to say, no escalations of wars, no other things which are popping up, which are disrupting the environment, the economic or political environment significantly globally.
Understood. Thank you very much. Very helpful.
The next question comes from a line of Giulia Aurora Miotto from Morgan Stanley. Please go ahead.
Hi. Hi, good morning. Thank you for taking my questions. I have two. Sorry, just to go back on the NII. Did I understand it correctly, that you are assuming continued faster growth of current account versus savings in term, i.e., a mix shift towards current account, which is more profitable, or are you assuming a stable mix shift from here? And I know we had a great mix shift in the quarter, I'm just looking forward. And then secondly, SRTs, you started doing some. How much shall we assume every year in addition to what you have already done? And I don't know if you can share any economics on this in terms of, you know, the costs to do so. Thank you.
Giulia, I apologize. Can you repeat your second question? Because I mean, it's very difficult to,
Ah, sorry.
to understand. No, no, please. Sorry.
Ah, okay. I was just asking about SRTs. How much are you planning to do every year-
Ah, SRT.
On SRT.
Okay, sorry.
Yes, SRT. Yes. Significant Risk Transfer.
Yeah, because we missed the word SRT, and therefore we-
Ah, right. Then it doesn't make sense. Okay.
Okay. Giulia, I will respond to both of your questions. So as far as the shift is concerned, we never indicated that it would be a shift only to current accounts. When we was referring to a shift, it's a shift that goes from term deposits to both current and saving accounts. So we do not specifically mention that it was only to current accounts. Secondly, as far as your SRTs is concerned, indeed, I mean, as we have always been saying, we see the SRTs as a means to an end. We are, of course, actively engaging into portfolio management, which is a number of tools that we used, and one of them is indeed SRTs.
Well, the reason why we're doing that is that we do not want to become fully dependent on the SRT market going forward. Having said that, you know, that we did our first inaugural SRT back in the fourth quarter, which was a very successful one, EUR 4.3 billion, out of which we re-generated a EUR 2.3 billion of risk-weighted asset saving, which is an efficiency of more than 50%. And also, as we indicated, this is at a cost, which is well below the cost of capital of KBC, so therefore, also contributing quite nicely. Going forward, we do intend to further invest or launch SRTs. We are currently making an analysis of the portfolio.
We have a relatively good view on which portfolios we will include, and indeed, you can expect further SRTs, depending, of course, also on the approvals that we get from the ECB. Because you also know that they have launched a so-called fast lane track, but there are quite a number of conditions that need to be fulfilled in order to be able to benefit from that fast lane approach. And so therefore, it's very uncertain whether we would be able to benefit. So therefore, take into account that we will probably launch a second SRT in the second quarter and a third SRT in the fourth quarter of 2026.
The amounts that remains to be seen and depends on the portfolio and the efficiency that we can generate on those portfolio, but we will keep you posted on that going forward.
Thank you very much. If I can just follow up on the first question, so the mix shift. So basically, you assume less term, more current and savings, and you base, you know, these go-to levels on history. So what can you share, basically, the split that you are using?
Well, it's very difficult to anticipate how much exactly is going to shift from the term deposits to CASA. And as I stated before, to a large extent, this will also depend on the development, of course, of the policy rates. Because if policy rates would go up again, you can expect, of course, that less will be shifting, and then we might even have to see a return from saving accounts to term deposits. So, that's the reason why it's very difficult to give you a clear indication of what the shift is going to be. But we do expect that for the time being, if, of course, policy rates remain as they are, that we will continue to see a shift from term deposits to CASA and particularly also to mutual funds.
Got it. Thanks.
The next question comes from a line of Chris Hallam from Goldman Sachs International. Please go ahead.
Yeah, good morning, everybody. Just two left. So I think both pretty simple ones. So why did 50% of the state notes go back to CASA? I know the rates on offer on term deposits aren't as generous as they were, but I guess they're still better than CASA rates. Just why do you think clients are proactively rebalancing their liquidity from locked up savings, from locked up, saving strategies into more operational accounts? So I know there's a difference between the flow, but just specifically when the state note matured and that flowback happened, maybe cases telling them to do that. And then perhaps I missed this earlier, but could you give us your best sense on the timeline on Ethias, where that currently stands? I know we've had a mark to market on that in prior calls.
I know it's not directly relevant for you as well, but any color you have on the timeline for Belfius and whether or not there could be any connection between those two processes? Thank you.
First of all, as far as your first question is concerned, and why indeed 40%-50% of the maturing term deposits went back to CASA. Obviously, when you look at the current external rates that we are able to generate, because of course, the main difference with last year is that the market has returned to more rationality. And as a result of that, basically, we are able to offer term deposits now, not at negative rates, but of course negative margins, but at positive margins. So the rates on the term deposits have come down significantly, and therefore, people are very unlikely or willing to continue to lock in their money for a longer term at such rates.
That's the reason they probably shifted more to CASA, waiting also for opportunities, and that's also what we're doing, to further invest in mutual funds. That is exactly what we are expecting, that we are moving, that we will—we see also more moving into the mutual funds going forward.
Thanks, Chris, for your questions. I will take the second one. If I add one more flavor to what Bartel just said, be aware that a lot of people which invest in term deposits were very wealthy people, and therefore they are inclined to go more into investment products. Anyway, going back to your second question. Well, the government has taken position also on the record on what they're going to do with their assets, and that is entailing, in essence, two things. The one, you know, is Belfius. They have the possibility to investigate a private placement of roughly 20% of the capital, which then also means that they could maintain their dividend, which goes into the budget, as you know, of the government.
The 20% sale goes into that GDP position of the government, and then they are the same talk, the same announcement. They also indicated that the position on ETFs is investigated, which means that in the course of 2026, they will position themselves, and that position can be twofold, that is, either launch it in terms of a sale, partial sale, whatever sale of Ethias. And then secondly, the other option would be, no, we keep it for whatever reason, huh? The position in this perspective of KBC is quite clear. We will struggle. Belfius is not possible for us, giving the concentration risk in terms of market share. And the second one, Ethias, we are clearly interested.
I said this on multiple occasions, and this is not changing, so we are definitely looking into that possibility. For that reason, we also prepared ourselves, and if the outcome of the government will be launched, we will be ready. If the outcome of the government no launch, then and clear statement that it will not be sold, then it is considered for us to be gone. And in that perspective, we will reconsider our position on the capital, which we hold specifically for that acquisition.
Great, thank you.
The next question comes from a line of Anke Reingen from RBC. Please go ahead.
Yeah, thank you very much. Just one follow-up question on the capital distribution. I'm sorry if I missed this. I'm just wondering, what was the thinking you moved to, like, 60% payout ratio, and you didn't go out all the way to the 65? And so I just one follow-up on the Ethias. You said there's also partial sale discussed. Would you be interested? I mean, I guess it depends on all the moving parts, but would a partial sale be of interest as well as a full acquisition? Thank you.
Thank you, Anke, for your questions. So on the dividend, well, you know, what is our policy is straightforward. We want to grow further our book. And in that growth of book is in two ways: organic growth, which we established this year, 9%, 8.7%, to be precise, and also acquisitions, which we did this year as well, with the acquisition 365.bank and the leasing companies in Czech Republic and in Slovakia. The outlook for 2026 is indeed, given the government statement, a potential acquisition. So 365.bank and businesses is going to be deducted from our capital this quarter. Sorry, yeah, this quarter, which is quarter one.
That is roughly 50 basis points, 46 + 4, and then our capital ratio stands at 14.4%. The acquisition of Ethias, if it comes to the table, will have an impact. I mean, according to the analyst reports, we don't comment on the precise impact, but according to analyst reports, most of them, under Danish compromise, consider this to be max 100 basis points. You can make the calculations yourselves. So in this perspective, the 60% payout is in a further execution continuation of our dividend policy, which may brings it now to EUR 5.10 per share, and is aligned with what I just explained on the potential acquisitions, and the potential M&A, which we can do in 2026, 2027.
In that perspective, it is also clear, that was also the answer which I just gave on, on Chris' question. If it is not coming to the table, then this capital is no longer allocated, to, to this part and becomes part of the distribution, clear. So in this perspective, we just keep, let's call it, the powder dry, and, we bring a very decent payout, and the consideration on the future in that perspective is quite clear. Or we do an acquisition, or we, release that, part of our capital in terms of capital, distribution. What about a partial sale?
Well, I mean, at this stage, if there is a partial sale with a straightforward message that no longer it is possible to do a full sale, well, that would then completely change our position because we are not interested to participate in an acquisition where we would hold, for instance, not the 100% or withhold a position where there is a firm stake of the government involved. So in that perspective, we still assume the position to be fully released by the authorities.
Thank you very much.
The next question comes from line of Farquhar Murray, Autonomous. Please go ahead.
Hello, and just one detail, question from me, actually, in this case, on the non-life side. I just wondered whether you factor in any cyclical softening to pricing in the non-life outlook when you look out to what's full year 2028. And maybe more in the here and now, are there any actual signs of such softening emerging in the markets you operate? Thanks.
Thanks, Farquhar, for your question. So, be aware in the position which we have, and softening of pricing is obviously related to two things, and that is, what is the current growth of your economy, which is triggering two things on the non-life side, for sure, the potential growth of your book, and the second part is, how profitable is your book? In terms of our profitability, we are a positive outlier compared to peers. Also, in the Belgian market, portfolios have improved on the market in general, but not to the same extent as where we are with KBC. So therefore, we have a competitive edge and to go immediately into the extreme version of soft pricing, that is a price war, I don't expect this to happen. Why?
Because the margins are good, but the margins are not so super in the sector, and KBC, the 87% in that perspective, is not representative of what we see in the market. And this is true in the majority of the countries where we are present. So do we expect a softening of the prices? The outlook is at least not that we go into a strong version of softening and definitely not into a price war. So in that perspective, the reason why we continue to see the growth of insurance companies and even upgraded the guidance to 7.5% is tailored to two things. First of all, what I just said, GDP growth is quite significant.
Don't forget that GDP growth in Central Europe is roughly 100-150 basis points, at least higher than what we see in Europe and Western Europe, sorry. Western Europe is considered to grow roughly 1%, 1.1%. Secondly, be aware that the underwriting of our non-life insurance business is fully automated. Same standards apply in the same group. That's one of the reasons why the combined ratio is what it is, but also allows us to, in that perspective, target very specifically the bank customers and other customers via the models which we use, and they are pushed, amongst others, by Kate.
Thanks.
The next question comes from the line of Sharath Kumar from Deutsche Bank. Please go ahead.
Good morning. Thank you for taking my questions. I have two. Firstly, on fee growth, what the embedded assumptions for your midterm guidance, I calculate around a 6% CAGR between now and 2028. Would you agree with it? And what sort of an assumptions predicate this. Specifically on asset management, do you think the 5% organic flow rate that we saw in 2025 is sustainable? Are there any positive, extraordinary performance fees that we need to be aware of in 2025? Secondly, on capital distribution, a follow-up on the ATS comment that you made. Assuming it does not happen, what is your excess capital stand? Would 14% be a realistic floor rather than the 13% minimum that you have in your policy? Thank you.
Okay, thank you. I will take the first question on net fee and commission income. Basically, you know that we are not guiding net fee and commission income for the very simple reason that basically, to a large extent, the development of net fee and commission income is defined by the asset management business, and therefore also, of course, by the development of the assets under management and the market performance. So because basically 55% of our net fee and commission income, roughly 55%, comes from asset management, and of the 55%, roughly 50% of our portfolio is in equity. So there we are subject, of course, to quite some market evolutions.
But the numbers that you have calculated in terms of the non NII growth are more or less, I mean, are certain numbers that I would be able to subscribe. Do we see some extraordinary fees or whatever? You know that in the fourth quarter there was a EUR 50 million fee that was paid, performance fee that was paid by the pension company in the Czech Republic. This you cannot extrapolate, obviously, because it's performance-related, but it is indeed the only annual performance fee that we have. And so from that perspective, the answer to your question is negative. And I will take your second question, Sharath.
So on the capital side, what would happen in terms of excess capital if ATS does not come to the table? Well, first of all, in terms of the final destination, that is, if we don't have any M&A possibilities concretely at the end of 2026, beginning of 2027, when we decide on the dividend, well, then this is considered to be surplus capital or capital which we cannot make work in terms of organic growth and M&A. So, and as I said, that will be then prone for distribution. How much capital is excess? Well, that's, we don't speak in terms of excess capital, so as we did what is it? Two years ago. This is no longer valid. We have a clear position there.
We have an absolute minimum of 13% on the CET1 ratio. We do have our current capital position, 14.4, if you take into account 365 and business lease, and then obviously you add to that the performance in terms of capital in the course of 2026 to end up with a number, and that will be compared to our peers in a non-mechanical way. So we want to be amongst the better capitalized financial institutions. That is something which we don't forego on, and that will be then decided by our board in all discretion. Let me emphasize one more thing, which Bartel said earlier.
We will continue to optimize our capital structure, and means, among others, that SRTs are tools which we have on the table, which we are preparing, and which are going to be indeed influencing positively the capital position.
Thank you.
There are no further questions, so hand back over to your host for closing remarks.
Thank you. This comes to that for this call. I would like to thank you for your attendance, and enjoy the rest of the day. Bye-bye.
Thank you for joining today's call. You may now disconnect your line.